Evaluating Your Company Strategy

High ideals, to be sure. But don’t confuse high ideals with modest ambitions. Companies with the most values-based critiques of their industries often turn out to be the savviest and most aggressive competitors. The stock market value of fun-loving Southwest Airlines exceeds the stock market value of every other U.S. airline put together. Quality-obsessed HBO was the first network in TV history to generate more than $1 billion in annual profits. ING Direct holds assets of more than $40 million per employee; the average for U.S. banks is about $5 million per employee. In other words, Arkadi Kuhlmann’s outfit is eight times more productive than the competition at generating assets. Who says high-minded values can’t drive cutting-edge performance?

2. Do you have a vocabulary of competition that is unique to your industry and compelling to your employees and customers?

And we mean a real, honest-to-goodness, only-spoken-here business language. Commerce Bank, a fabulously successful financial services company, has such a unique strategy, and such a homegrown vocabulary, that it actually publishes a dictionary of “Commerce Lingo.” New employees learn the meaning of “One to Say Yes, Two to Say No”: “The rule that states all employees can say ‘yes’ to a customer, but must first check with their supervisor before saying ‘no.’” They learn the essence of “retailtainment”: “The art of engaging customers and creating moments of magic so that every customer leaves Commerce with a smile.” And on it goes for pages, explaining terms that eventually become second nature and ultimately make Commerce a one-of-a-kind competitor.

Companies that think differently about their business invariably talk about it differently as well. What language does your company speak?

3. Are you prepared to reject opportunities that offer short-term benefits but distract your organization from its long-term mission?

At every company we’ve explored, the road to prosperity has been determined in part by the road not taken — choices not to pursue markets that looked seductive but were at odds with the company’s advocacy agenda, decisions to turn down customers who could pay the bills but didn’t fit the strategic bill.

Scott Bedbury, a marketing wizard who played a key role in brand-building for Nike and Starbucks, likes to say that some of the best moves he ever made were the growth opportunities he passed up. He calls it the “Spandex Rule of Branding,” and it applies to strategy as well as marketing: “Just because you can doesn’t mean you should.”

The Spandex Rule helps to explain why ING Direct passes on business opportunities that would make traditional bankers salivate. It explains why Craig Newmark and Jim Buckmaster of Craigslist are determined to keep looking for reasons not to charge visitors, even though the site’s devoted users, both buyers and sellers, are certainly prepared to pay for some services. It explains why Southwest Airlines has never adopted some of the most common practices of its rivals.

The answer to the most fundamental question you should ask yourself might scare you…